Energy service group Hunting said yesterday it had acquired privately owned Houston-based National Coupling Company (NCC), which develops and manufactures subsea hydraulic equipment, for about £38million in cash.
The news came as chairman Richard Hunting told shareholders at the firm’s AGM that its North Sea business was performing very well and should continue to do so through the first half of 2009, although the balance of the year was less visible.
He also said there had been a rapid decline in business in North America combined with reduced margins, which would affect the company in the months ahead.
Mr Hunting added that the first half of the year remained positive, with robust trading in certain businesses and performance in the Middle East and south-east Asia offsetting declines in North America, and said trading overall from January to March had been in line with the board’s expectations.
Mr Hunting said recovery in America would ultimately depend on a rebound in natural gas prices, but added that with lower industrial demand because of the recession, coupled with high storage levels, a recovery in gas drilling appeared unlikely in the short term.
London-based Hunting said that in acquiring NCC it had added a leader in subsea coupling technology to its portfolio of businesses.
It said that in addition to the initial payment, a further £3.45million would be paid after one year if performance targets were achieved.
It added that it expected the acquisition would be earnings enhancing in 2009.
Hunting said the acquisition of NCC marked a step change in the group’s presence in the high-pressure deepwater drilling market, adding that companies including Petrobras, Shell, Total, Chevron, BP, Exxon and Statoil were forecast to spend more than £55billion in this area in the next five years.
The company said in February it had identified four acquisition targets, the first of which has now been secured. The other targets are a steel-processing company in the US, an intervention and rental product business with operations in Aberdeen and the Middle East and a manufacturer in Indonesia.
Hunting said in February that at the end of 2008 it had eliminated borrowings and still had net cash of £372.3million following the sale in December of Canadian oil and gas business Gibson Energy which raised £517million. The remaining three acquisitions lined up are expected to cost Hunting about £56million.
The company’s global workforce of 1,600 includes about 280 at tubulars operation at Portlethen, near Aberdeen and Montrose, and at the Hunting Cromar wireline and pressure-control business in Aberdeen.
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